InvestBulgaria AgencyInvestBulgaria Agencywww.investbg.government.bgwww.investbg.government.bg
Bulgaria – your investment decisionBulgaria – your investment decision
Dr. Stoyan StalevDr. Stoyan StalevExecutive DirectorExecutive Director
“UBCCE Third Business Forum”12-13 November 2009
Strategic location Why Bulgaria Macroeconomic Indicators FDI Inflow Highly Skilled Labor Force Comparison between
Bulgaria and Europe Business Sectors of Highest
Potential for Investors Our achievements in figures Investment Promotion Act Investment Incentives in
Bulgaria InvestBulgaria Agency
Structure of the Presentation
Pan-European Transport Corridors
9
4
7
10
8
Market access
EU membership and NATO membership Currency board EU’s most favourable taxes:
•10% corporate income tax rate• 0% in high-unemployment areas•10% flat tax rate on personal income
Europe’s most competitive operational costs Well-educated and highly-skilled labour force 45,000 Bulgarian students in Europe Government financial support for priority investment
projects Linking Europe and Asia Excellent climate, natural scenery, food and
hospitality
Why Bulgaria
Source: Bulgarian National BankSource: Bulgarian National Bank
GDP (annual real growth rate,%), 2002-2009
2009*
* January - June 2009
4.5 5.06.6 6.2 6.3 6.2
-4.9
6.0
2002 2003 2004 2005 2006 2007 2008
Source: Bulgarian National BankSource: Bulgarian National Bank
Inflation, (annual change, %), 2004 - 2009
* January - September 2009* January - September 2009
4.06.5 6.5
12.5
7.8
0.2*
2004 2005 2006 2007 2008 2009
Source: Bulgarian National BankSource: Bulgarian National Bank
Unemployment rate (%), 2003 - 2009
* January - September 2009* January - September 2009
13.512.2
10.79.1
6.9 6.38.0*
2003 2004 2005 2006 2007 2008 2009
Source: BNB, IBASource: BNB, IBA
Record FDI inflow in 2006 – 2008, EUR m
* Preliminary Data, *** Preliminary Data, ** January January –– August August
Greenfield+Expansion
866 1 103 903 9801 851
2 7363 152
6 222
8 596
6 549*
1 952**
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
FDI to GDP, %, 2007 – 2008FDI to GDP, %, 2007 – 2008
Source: BNB, Bank Austria CreditanstaltSource: BNB, Bank Austria Creditanstalt
Bulgaria leads CEE countries in terms of FDI to GDP indicator
6.0
0.8
6.85.4 5.8 6.1 6.2
4.43.4
4.93.4 3.3 3.0
6.6 5.8 5.4
2.50.7
2.5-0.8
29.7
19.2
BULGARIA CZECHREP
HUNGARY LATVIA POLAND ROMANIA UKRAINE SERBIA SLOVAKIA SLOVENIA TURKEY
2007 2008
FDI stock by sector, 1998 – 2008, %, EUR m
Quelle: BNB, IBAQuelle: BNB, IBA
22%22%
19%19%
19%19%
16%16%
7%7%
6%6%
5%5%
6%6%1886.9
1766.6
1931.2
2247.5
5509.0
6274.3
7469.9
6477.5
Other
Telecom
Electricity, gas and water
Construction
Trade
Manufacturing
Finance
Real estate
Source: BNB, IBA
Austria the Netherlands Greece Un. Kingdom Germany
16%
5367.7
12%
4145.7
9%
3074.4
8%
2710.0
7%
2229.4
Cyprus
Belgium &
Luxemburg USA Hungary Italy
5%
1726.2
5%
1612.0
4%
1285.8
3%
1171.3
3%
1105.4
FDI stock by country,1996 – 2008, %, EUR m
Treaty for avoidance of double taxation
between Bulgaria and Greece
Treaty for encouragement and reciprocal
protection of investments
Greece investments (1996-2008)
3074.4 EUR m
The biggest investments are in Finance
and Telecom
Greece investments in Bulgaria
Greece investment stock by years, EUR million, 2004 - 2008
Source: BNBSource: BNB
Greece investment stock in Bulgaria as of end of 2008 amounts to Greece investment stock in Bulgaria as of end of 2008 amounts to EURO 3074.4 EURO 3074.4 millionmillion, According to the FDI Stock by countries , According to the FDI Stock by countries Greece is ranked 3rdGreece is ranked 3rd
179.6
324.2
533.5
802.3
395.4
2004 2005 2006 2007 2008
Trade between Bulgaria and Greece
The trade between Bulgaria and Greece for 2008 amounts EUR 2676 m
Source: BNBSource: BNB
794891
10731230
1508
668735
9671126 1168
2004 2005 2006 2007 2008
Export to Greece Import from Greece
25022
2862
12005
8253
23764
132869
12992
681
493
4175
10124
39594
14288
262
528
4901
10307
61262
Russian
Italian
Spanish
French
German
English
Sofia
Plovdiv
Varna
Source: National Statistics Institute
Language education in upper secondary general schools by city, 2008/2009
~ 39,000 – Total number of students enrolled in IT and
Engineering related programs
Sofia Gabrovo
Rousse
Varna
Plovdiv
1699516995
41324132
35923592 43234323
49244924
Students enrolment in vocational schools & technical universities for 2008/2009
Bulgaria
Comparison between Bulgaria and Europe
Strong Fiscal Policy and Stable CurrencyStrong Fiscal Policy and Stable Currency
General Government Balance, %General Government Balance, %
Source: Economist Intelligence Unit, IBASource: Economist Intelligence Unit, IBA
Hungary Romania SlovakiaCzech
Republic
*0% Forecast for 2009-5.7%
-2.3% -2.2%-1.6%
3.5%
-3.8% -3.4%
-2.2% -2.0%
3.0%
2007 2008 E
Source: Economist Intelligence Unit Source: Economist Intelligence Unit
Comparison between Bulgaria and Europe
Average monthly wages, Q2 2008, EURAverage monthly wages, Q2 2008, EUR
261
463
744 790
945
Bulgaria Romania Slovakia Hungary CzechRepublic
Comparison between Bulgaria and Europe
10%
16% 16%19% 20% 20%
Bulgaria Romania Hungary Slovakia CzechRepublic
Turkey
Source: IBASource: IBA
* 0% for manufacturing companies in areas with high unemployment* 0% for manufacturing companies in areas with high unemployment
Corporate income tax rateCorporate income tax rate, , 20092009
Source: EUROSTATSource: EUROSTAT
Price level indices for all consumer goods and services, 2008, (EU27=100)
100
51
6269 70 70 72
83
99104 105
111
EU 27
Bulga
ria
Roman
ia
Polan
d
Hungar
y
Slova
kia
Czech
Rep
ublic
Slove
nia
Unite
d Kin
gdom
Germ
any
Italy
Franc
e
Attractive sectorsAttractive sectors Major investors supported by Major investors supported by InvestBulgaria Agency InvestBulgaria Agency
Electrical engineering Mechanical engineering Electronics Automotive parts manufacturing Chemical Industry
Solvay (Belgium) Aurubis (Germany) Liebherr (Germany) Lufthansa Technik (Germany) Montupet (France) Italcementi (Italy) Sise Cam (Turkey) Stomana Industry (Greece) Miroglio (Italy) Knauf (Austria) Ixetic (Germany) Schneider Electric (France)
Competitive advantagesCompetitive advantages Export oriented sectors The lowest operational cost in EU Highly skilled labour force
•7% with engineering degree•EUR 280 total average monthly
compensation (Q4 2008)
Manufacturing
OpportunitiesOpportunities Major projects supported by Major projects supported by InvestBulgaria Agency InvestBulgaria Agency
Wind parks Solar plants New nuclear PP Modernization and construction of new TPPs Biomass Biofuel
7 wind park projects 3 projects for modernization and construction of new TPPs 2 Biomass projects 3 Biofuel projects
Competitive advantagesCompetitive advantages Skilled labour force Availability of natural resources Favorable climate conditions Harmonized legislation with the EU’s
RES electricity production to double (from 6% to 12%) by 2010 Administrative and economic incentives for RES energy production
Energy Sector
IT & BPO
OpportunitiesOpportunities Main Players in Bulgaria Main Players in Bulgaria Software development IT support centers F/A shared service centers Contact centers
IT•Software AG (Germany) •Microsoft (USA)•Hewlett Packard (USA)•IBM (USA)•Nemetschek (Germany)•Johnson Controls (USA)•SAP Labs Bulgaria (Germany)•CISCO (USA)
BPO•60K (UK)•Sutherland (USA)•IBM (USA)•OPI Global (USA)•Hewlett Packard (USA)•C3i (USA)
Competitive advantagesCompetitive advantages Skills availability Strong traditions in IT development Reliable telecom infrastructure Europe's most competitive wages Reasonable office prices 9.71% share of the GDP for 2008 (second fastest growing sector in the country)
Real estate & Tourism
OpportunitiesOpportunities Major projects supported by Major projects supported by InvestBulgaria Agency InvestBulgaria Agency
Development ofDevelopment of• trade centers trade centers • business parks business parks • residential parksresidential parks• convention centersconvention centers• winter resorts winter resorts • balneology and SPA tourism balneology and SPA tourism • rural and alternative tourismrural and alternative tourism
Golf tourismGolf tourism Construction of luxury hotelsConstruction of luxury hotels
23 trade centers projects23 trade centers projects 6 business park projects6 business park projects 9 golf projects9 golf projects 5 winter resort projects5 winter resort projects 5 5 balneology and SPA tourismbalneology and SPA tourism
Competitive advantagesCompetitive advantages Real Estate is the fastest growing sector in the countryReal Estate is the fastest growing sector in the country FDI inflow in Real Estate amounts to EUR 19FDI inflow in Real Estate amounts to EUR 190000 mln. in 2008 mln. in 2008
(EUR (EUR 74097409 mln. (22%) for the period 1998 – 200 mln. (22%) for the period 1998 – 20088) )
Our achievements in figures
Source: IBASource: IBA
We are assistingWe are assisting 112121 certified investment certified investment
projects projects
EURO 9EURO 9..88 bln planned investments bln planned investments
5353 80800 0 new jobs will be creatednew jobs will be created
August 2004 – September 2009August 2004 – September 2009
Investment Promotion Act
Promotion for initial investment in the following sectors
Manufacturing industry
Production of electricity from renewable sources
Computer technologies
Research and development
Education
Human health care
Investment classifications under the investment promotion act, (€ Million)
Region or Sector Class B Class AGeneral
8 - 16 >16
In municipalities with unemployment rate equal or more than the country average 4 - 8 >8
In high-tech activities in the manufacturingindustry for the whole country 4 - 8 >8
In high-tech activities in the services, computer technologies and R&D sectors for the whole country
2.8 – 5.6 >5.6
Investment classes A and B depending on the value, region and sector allocation of the investment
All classes (A&B) Information services and shortened administrative services
Preferential treatment upon acquisition of a right of ownership and limited real rights over real estate – private state or private municipal property
Financial support for vocational training of employees for the needs of the investment project
A class Individual administrative services
Infrastructure support to the borders of the investment project site
Incentives under the Investment Promotion Act
No sector restrictions
Council of Minister decision
Conditions:
investment more than 50 Million Euro
or investment in depressed regions
or investment in High-Tech
or investment in industrial zone construction
Incentives
VIP treatment
Special Incentive Package
Priority Investment Projects
10% corporate income tax;
0% for manufacturing companies in areas with high unemployment
10% personal income tax, flat rate
Opportunity for R&D expenditure write-off
Depreciation of 2 years for computers and new manufacturing equipment
2-year VAT exemption for imports of equipment for investment projects over € 5 million, creating at least 50 jobs
5% withholding tax on dividends and liquidation quotas (0% for EU tax residents)
Up to 1 year minimum salary and reimbursement of social/health care security for employing young people and disadvantaged people through the Employment Agency
Investment incentives in Bulgaria
InvestBulgaria Agency is the Government investment promotion arm, part of the Ministry of Economy and Energy.
IBA services: Macroeconomic data on Bulgaria Legal advice Data on operational costs Regional information: industrial zones and infrastructure, data on
unemployment, skilled labour force and level of education Recommendation of investment project sites Identification of potential suppliers, contract manufacturers and
joint-venture partners Personalized administrative servicing Liaison with central and local governments Liaison with branch chambers and NGOs
InvestBulgaria Agency
InvestBulgaria AgencySofia 1000, 31 Aksakov Str.Phone: (+359 2) 985 5500Fax: (+359 2) 980 1320E-mail: [email protected] Web: www.investbg.government.bg